EUR/USD Exchange Rate Drops as Eurozone Consumer Confidence Dwindles
The Euro US Dollar (EUR/USD) exchange rate is down by 0.4% today and is currently trading around $1.1213.
The Euro (EUR) fell against the US Dollar (USD) following the disappointing release of the flash Eurozone consumer confidence figures for April, which fell below expectation to -7.9.
Analysts at Nordea Markets highlighted a number of factors affecting the Eurozone in their recent statement, which said:
‘The negative factors hitting confidence, which were initially thought to be temporary – Brexit, the trade war, problems with German car manufacturers, French yellow-vest protests, the Chinese slowdown – have proved longer-lasting, which will also lead to more subdued economic performance.’
Italy’s economy is still proving a drag on the single currency, representing, as some analysts have noted, a bigger threat than the UK’s Brexit.
Jack Allen, an analyst at Capital Economics, commented:
‘Italy’s economy is essentially going to flatline in the medium term. This would be a bigger problem than the previous Eurozone crisis and could once again endanger the single currency itself.’
The US Dollar, meanwhile, has benefited from better-than-expected US new home sales figures for March, which rose above the forecast 0.650M to 0.692M.
USD/EUR Exchange Rate Rises as Trump Slashes Waivers on Iranian Oil Importers
Today saw the publication of the US Housing Price Index figures for February, which came in as forecast at 0.3% – slipping slightly from February’s 0.6%.
The ‘Greenback’ has also benefited from US President Donald Trump putting an end to sanctions that exempt major importers of Iranian oil.
This will affect a number of countries, including China, South Korea and India, while providing the US in some leverage for US-China trade talks as oil prices increase as a result.
US Secretary of State, Mike Pompeo, defended Mr Trump’s decision, saying:
‘We have had extensive and productive discussions with Saudi Arabia, the United Arab Emirates, and other major producers to ease this transition and ensure sufficient supply. This, in addition to increasing US production, underscores our confidence that energy markets will remain well supplied.’
EUR/USD Forecast: Euro Could Rise on Signs of a UK Brexit Consensus
Euro traders will be looking ahead to tomorrow’s publication of the German IFO business climate figures for April, which are expected to improve.
These will be followed by the Eurozone’s economic bulletin report, and any indications that the economy is suffering from drags such as Italy’s economy and the UK’s ongoing Brexit uncertainty, this could see the single currency fall further.
The Euro US Dollar (EUR/USD) exchange rate will remain sensitive to geopolitical developments this week, and any signs of the UK potentially emerging with a consensus on Brexit could benefit the single currency as a deal between the EU and the UK would be more likely forthcoming.